China’s team of crack trade negotiators will extract their ‘pound of flesh’, experts say

China’s team of crack trade negotiators will extract their ‘pound of flesh’, experts say

China’s crack team of trade negotiators is professional, productive and ruthless and has been described by a group of their international counterparts as “among the best in the world”.

In a series of interviews conducted by the South China Morning Post with experienced current and former trade negotiators, China has been backed to drive a hard bargain in the ongoing dispute with the United States, but to ultimately follow through with whatever its negotiating team shakes on.

Those who have direct experience of thrashing out trade deals with Chinese officials over the years have described them as being straight-talking and clear in what they want to achieve. However, scepticism remains as to whether China makes good on these pledges in the long run.

“I found my counterparts pretty straight, very hard, very difficult, technically excellent, none of this ‘they’re just learning’ crap, they knew what they were doing, and they extracted their pound of flesh,” said a leading trade official who negotiated one of the first bilateral trade deals with China in the 2000s, but who asked not to be identified.

The officials, who have experience of negotiating with China over the past four decades, warned that each move in this week’s Beijing round of talks will be carefully calculated to extract every drop of benefit, from the colour of the carpet to the shape of the table.

“Negotiations were a balloon, and they knew where to squeeze,” said Nicole Bivens Collinson, a trade lawyer who negotiated apparel deals with China on behalf of the US government in the 1990s.

She pointed to the fact that Chinese vice-premier Liu He was the most senior among the at least 100 Chinese officials appearing in leaked photographs this week as evidence of how carefully the Chinese have choreographed the occasion.

“I tip my hat and say: ‘well played.’ The US said these are preliminary negotiations and sent over a paltry team of five or six, embassy personnel and translators bring it up to maybe 14,” added Collinson.

“The Chinese were visually showing the world that China is committed to this, that China is trying to reach an agreement where the US is not really interested in negotiating.”

China acceded to the World Trade Organisation (WTO) in 2001, a seismic event for the global economy that helped make the country the factory of the world, with the event blamed by many for helping to hollow out manufacturing in the West.

Mickey Kantor, the United States Trade Representative (USTR) under former president Bill Clinton, said that the Chinese negotiators were better to deal with than some of their international counterparts because they were “very direct – not easier, but direct”.

“That is not usual among many nations. Maybe we were cut from the same cloth,” Kantor said. “On the Chinese side I had madam Wu Yi as my counterpart, who was a terrific Chinese official, people in China recognised how good she was. I thought she was the world’s best trade negotiator.”

After China acceded to the WTO, it began to establish free trade agreements (FTAs) of its own.

Professor Joseph Francois, managing director of the World Trade Institute in Bern, was among those charged with training Chinese negotiators in WTO law.

“There was a small army working with the Chinese back then, half the World Bank was working with them,” he said. “We were running courses for years out of Australia with people who are now mid to high level in MOFCOM (the Ministry of Commerce of the People's Republic of China), teaching them the basic economics of the trading system. They understand it very well, they have very good people.”

Costa Rica was among the first nations to sign an FTA with China, launched after former president Hu Jintao visited the Central American nation in 2008. The deal was signed in 2010, at which point Anabel González the Costa Rican trade minister.

She described the deal as a “very important accomplishment for Costa Rica”, but warned that in these situations, it pays to be flexible.

“Each negotiation is different, has its own tempo, and evolves over time,” González said.

Of course, the dynamic could not be more different this time around as Costa Rica has fewer than five million people and, according to the International Monetary Fund, has an economy only slightly bigger than Macau.

Negotiations with the US will clearly be more complex, especially with such geopolitical and economic headwinds swirling around the world.

Furthermore, China may not be accustomed to negotiating in the transactional manner preferred by US President Donald Trump, professor Francois said.

“This is an unusual thing, we haven’t seen this angle before. I speculate that it’s going to be quite difficult. There’s one side that thinks it has all the cards and can demand what it wants. Or maybe it doesn’t, maybe it’s just bluster. Maybe it’s like a New York real estate deal,” he said.

This unpredictable element is expected to further strain a dynamic which has, for many years, been fraught.

Darci Vetter, who was the chief agricultural negotiator for the USTR under former president Barack Obama, said that the mood in Beijing this week – and going forward – will be difficult.

“I do suspect it will be tense. Relationships between the two countries have been tense. My past relationships with the Chinese have been tense, not combative, but negotiations have been difficult,” Vetter said.

“Agriculture has traditionally been the most sensitive topic, not just in China. But these talks are very different.”

Indeed, tempers can often flare when agricultural matters are on the negotiating table as it cuts to the heart of what many economies feel is most important.

The industry lobbies are generally powerful and the agricultural communities come out to vote in droves, so few trade sherpas wish to return home with a deal which is perceived to have sold their farmers short.

“MOFCOM guys may be more cosmopolitan, but when you met the agriculture guys, there’s an unreconstructed bunch if ever you met one,” said a trade official, speaking under the condition of anonymity.

“But frankly, they’re an unreconstructed bunch in the EU, in the US. The Chinese may not have been so smooth in a personal sense, but the message was the same as with the US. They’re all b******s!”

The USTR is considered to be the gold standard in trade negotiators, but will also be unaccustomed to dealing with a counterpart that could reasonably be considered to be an economic equal, experts said.

The US has never managed to secure an FTA with the European Union, a traditional ally, with negotiations often turning fractious.

For this reason, USTR veterans have discouraged their contemporaries from doing anything that could be perceived as being disrespectful to the Chinese.

“There are times when with US negotiators it’s all personality driven. They think that winning is making the other team look bad. That fits into the Trump administration camp, the only way of winning is by making it look like you stuck their head in the toilet,” Collinson said.

She recalled an apocryphal piece of trade lore from the 1980s, which is often attributed to current USTR Robert Lighthizer who was then deputy USTR, but which she said was actually the work of Mike Hathaway, at the time one of his chief trade counsels.

“I had one US colleague, who sat across from the Japanese. They gave him a proposal in writing. He looked at it, folded it up as he was talking, made it into a [paper] aeroplane and shot it back across the table back at them,” she said.